Indian Tax related news and articles

[yogi]

We will be using this thread to post useful news and articles about taxes in India. Please provide appropriate reference for the article. It is okay to copy portions of the article. A brief summary that tell the usefulness of the article would be appreciated.

[yogi]

Tax break for house buyers (timesofindia.com | 4 February 2009)

BANGALORE: Amid the prevailing gloom, there’s a sliver of good news. You can save approximately Rs 1.2 lakh to Rs 3 lakh on a two-bedroom apartment and Rs 6 lakh to Rs 10 lakh on a villa in Bangalore. Central Board of Excise and Customs has exempted residential units from service tax, as per a communication to the apex body of developers CREDAI (Confederation of Real Estate Developers’ Associations of India).

House buyers till now had to pay a 12.5% service tax. This applied to the service components in the construction of a house (like the services of architects, project management consultants, plumbers, etc), and consequently the taxing structure varied from project to project depending on whether it is an apartment, villa or row house. Typically, the service tax paid varied between 3% and 5% of the total cost of a flat or villa, including the land cost. It’s not clear yet whether this will apply retrospectively to properties already booked. CREDAI is seeking a clarification on this, and expects it in a week.

CREDAI officials say that they are seeking clarifications to ensure benefits are passed on to consumers. The real estate market in the city, which has been stagnant for over six months, is now seeing some buyer interest on the back of falling interest rates on home loans.

This news came out half a year back. But it definitely is good news for the middle class. With high loan interest rates, this will be a relief to many homeowners.